1 BEFORE THE MISSOURI GAMING COMMISSION

Telephonic Meeting

5 September 12, 2003

Missouri Gaming Commission

6 3417 Knipp

Jefferson City, Missouri

9 COMMISSION MEMBERS: Floyd Bartch, Chairman

Judy Sutter-Hinrichs, Member

10 Jack Gant, Member

17 REPORTED BY:

18 KELLENE K. FEDDERSEN, RPR, CSR, CCR

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19 714 West High Street

P. O. Box 1308

20 JEFFERSON CITY, MO 65101

(573) 636-7551

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1 P R O C E E D I N G S

2 MR. KEVIN MULLALLY: We have -- I guess I hear Judy,

3 and Jack is on the line?

4 CHAIRMAN BARTCH: I haven't heard Jack yet.

5 COMMISSIONER GANT: I'm on.

6 MR. MULLALLY: We have St. Louis and Kansas

7 City. We have St. Louis office, Debi?

8 MS. DEBI GRUENEBERG: Yes.

9 MR. MULLALLY: And Kansas City?

10 MR. DARYL ROBERTS: Right.

11 CHAIRMAN BARTCH: Pardon?

12 MR. MULLALLY: Do we have Kansas City office

13 on the line?

14 MR. ROBERTS: Yes, Kansas City's on the line.

15 MR. MULLALLY: And Mark Schroeder?

16 MR. MARK SCHROEDER: Yes. Good morning.

17 MR. MULLALLY: And Rick is in Kansas City?

18 MR. ROBERTS: Yes, Rick's here.

19 MR. MULLALLY: Anybody in St. Louis, Debi?

20 MS. GRUENEBERG: Yes, John Davis, Jim

21 Oberkirsch, Dan Vetter and Fred Stuckul.

22 MR. MULLALLY: All right.

23 CHAIRMAN BARTCH: Are we ready?

24 MR. MULLALLY: Yes, sir.

25 CHAIRMAN BARTCH: If somebody would call the

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1 roll, please?

2 MS. ANGIE FRANKS: Chairman Bartch?

3 CHAIRMAN BARTCH: Present.

4 MS. FRANKS: Commissioner Hinrichs?

5 COMMISSIONER SUTTER-HINRICHS: Present.

6 MS. FRANKS: Commissioner Gant?

7 COMMISSIONER GANT: Present.

8 MR. MULLALLY: Mr. Chairman, with your

9 permission, what I think I'd like to do is, Mark Schroeder

10 is on via cellphone, and rather than try to risk losing him,

11 if we could take things out of order and go ahead and do the

12 Sigma issue first.

13 CHAIRMAN BARTCH: No problem.

14 MR. SCHROEDER: Thank you.

15 MR. MULLALLY: That is under Tab E, and Mike

16 Bushmann is here to make the presentation.

17 MR. MIKE BUSHMANN: Good morning, Commissioners.

18 Hope you can hear me okay.

19 As you know, Sigma Game has been operating

20 with a temporary supplier's license ever since the

21 Commission entered into a settlement agreement with that

22 company, and that supplier's license is due to expire on

23 September 26th.

24 Before the Commission agreed to give Sigma an

25 annual supplier's license, Sigma had to complete certain

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1 tasks involving the execution of a trust, the approval of a

2 trustee and interview of Mr. Manabe. Those tasks have not

3 been completed at this time.

4 In the settlement agreement, the Commission

5 agreed that if Sigma was exercising good faith, then the

6 Commission would extend the temporary supplier's license

7 until those tasks could be completed.

8 The staff has found that there's currently

9 insufficient evidence that they've not been acting in good

10 faith, and so we recommend that this Resolution 03-074 be

11 approved, which would extend the temporary supplier's

12 license for 30 days until October 31st, and that would also

13 give the authority to the Executive Director, if he finds

14 that they're acting in good faith after that time, to extend

15 it an additional month to November 30th.

16 COMMISSIONER GANT: Mike, can I ask you --

17 this is Judge Gant. It's been three and a half months.

18 What have they done? The facts I got said they hadn't

19 complied with anything yet. What's the holdup, do you know?

20 MR. BUSHMANN: My understanding in speaking

21 with Sigma's representative, and Mr. Schroeder might be able

22 to add some to this more current information, is that they

23 have submitted an application on behalf of Judge Stein.

24 That was delayed somewhat because, unfortunately, Judge

25 Stein's wife died during the summer. And so there was a

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1 delay getting his information to us.

2 Mr. Manabe was supposed to be evaluated by a

3 physician in Japan yesterday to determine his ability to

4 travel for an interview. And so those things have kind of

5 delayed things. Mr. Schroeder may have some more

6 information since we spoke a few days ago.

7 MR. SCHROEDER: If I may, it's been -- I know

8 that the staff has expressed some frustration with the

9 situation, and Sigma's frustrated as well. Justice Stein's

10 wife took ill, as Mike had mentioned, and then subsequently

11 passed away, and that set us back some time.

12 It also was compounded by the fact that the

13 number of jurisdictions which seek to approve either the

14 transfer and/or -- excuse me -- the transfer of the stock

15 into the trust and/or Justice Stein as a key person

16 beforehand was much greater than we thought. We thought

17 there might be two or three jurisdictions, and there's eight

18 at this point. So that's put us -- made it a bigger task

19 than we expected.

20 Mr. Manabe at the time I appeared before you

21 back at the end of April was hospitalized, and all in all

22 was hospitalized for a couple of months. His doctor in

23 Tokyo has not released him yet to travel, as I mentioned to

24 Mike on the phone the other day. His doctor was to evaluate

25 him again yesterday. We are waiting to hear what the

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1 results of that are, because he understands that he needs to

2 come to Missouri to meet with the staff for a -- excuse

3 me -- an interview.

4 So at this point we expect that everything --

5 we're submitting the final papers that need to be submitted

6 to some of the jurisdictions today and Monday, and then

7 the -- as far as our ability to get things done, everything

8 is done except for getting Mr. Manabe to Missouri.

9 COMMISSIONER GANT: So you think you ought to

10 be through in the next few weeks at least?

11 MR. SCHROEDER: Yeah. We don't have any

12 reason to believe that's not the case. As I said, it's been

13 frustrating for Sigma because they certainly don't want to

14 continue to operate under a temporary license and they want

15 to put this issue behind them.

16 COMMISSIONER SUTTER-HINRICHS: If Mr. Manabe

17 is not able to travel, if it's deemed that he cannot travel

18 after a couple of months, will someone from our staff go

19 there or how will that be dealt with?

20 MR. MULLALLY: No. I don't believe that we

21 expect to travel to Japan, at least at this point in time.

22 The resolution was carefully worded in that we say that

23 there's insufficient evidence that they have not made a

24 good-faith effort. We're not willing at this point to say

25 that they have made a good-faith effort.

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1 And although some of the things identified by

2 Mr. Schroeder are certainly understandable, this company is

3 piling up a series of bad luck that is perhaps unprecedented

4 in the gaming industry and is becoming somewhat difficult to

5 believe at times.

6 Justice Stein, although we certainly have a

7 great deal of sympathy for the fact of the unfortunate

8 situation with his wife, still has not submitted all the

9 information we need in order to complete this background

10 investigation. That situation has to change and it has to

11 change soon.

12 They also need to show they have made

13 substantial progress in some of these other jurisdictions.

14 I realize that the number has added, but the fact that they

15 have not been able to obtain approval in one single

16 jurisdiction yet is troubling.

17 So although this resolution gives the Director

18 the power to extend it for 30 days, I can assure you that if

19 they don't make a little better progress in the next 30 days

20 than they've made in the previous 90 or 120 or whatever it

21 has been, I'm not going to be willing to do that, unless

22 ordered to do so by the Commission.

23 CHAIRMAN BARTCH: You know, this is a

24 situation where certainly these are reasons why we should

25 extend a temporary license, but since I've been on the

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1 Commission, we have been struggling with this and the staff

2 has been putting forth tremendous hours trying to get this

3 accomplished.

4 So there's no question that we have to somehow

5 come to some resolution as we go in the next 30 to 60 days

6 as it's been going on much too long.

7 MR. SCHROEDER: We understand.

8 MR. MULLALLY: Mr. Chairman, we all realize

9 that in this business and in all businesses from time to

10 time you have obstacles, but there are ways to get things

11 done if sufficient effort is put forth. And frankly, I'm

12 just -- I'm just not comfortable that that's being done.

13 I mean, if this is a high enough priority for

14 them, they'll get at least some of these things done. And

15 the fact that they haven't got any of them done is, the mild

16 word is frustrating.

17 COMMISSIONER SUTTER-HINRICHS: I'd call it

18 troubling.

19 MR. SCHROEDER: If I may just add something.

20 Sigma is licensed in 70 or 80 jurisdictions, and 70 or 80

21 jurisdictions want information as it relates to this, and

22 it's been, as I understand the case, that they want actual

23 forms. But it wasn't a function of -- it's a bit of moving

24 an army or a truckload of paper to different jurisdictions

25 and keeping them apprised of what's going on in the

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1 different jurisdictions.

2 A number of jurisdictions have told us that,

3 based on the information we provided, that they don't need

4 to preapprove the trust or approve Mr. -- or Justice Stein

5 as a trustee. So we do feel that we've made some progress,

6 but we're frustrated as well that it's taking longer than we

7 anticipated.

8 MR. MULLALLY: Mr. Chairman, in somewhat of a

9 response, we deal with supplier companies every day on

10 complicated transactions, some that are much more

11 complicated than this.

12 You know, I don't know how many jurisdictions

13 IGT does business in, but I suspect it's more than 70, and

14 they figure out a way to get us the information we need.

15 When we tell them we need something and we set a deadline,

16 they manage to get it done, as do a number of other

17 companies.

18 COMMISSIONER GANT: Why don't we do this right

19 now. Mr. Schroeder, you certainly understand our concerns.

20 MR. SCHROEDER: Absolutely.

21 COMMISSIONER GANT: And that was my original

22 question, because we had passed this, I think, on May 28 and

23 here it was three and a half, going on four months later.

24 Mr. Chairman, I'll move that we do grant the

25 temporary license for the 30 days and also give Kevin the

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1 authority to extend it for another 30 days as long as

2 progress is being made.

3 COMMISSIONER SUTTER-HINRICHS: I'll second. I

4 assume that, Judge Gant, is that you were moving

5 approval of the Resolution 03-074.

6 COMMISSIONER GANT: FedEx hasn't brought me my

7 book yet. I don't know what the resolution number is.

8 COMMISSIONER SUTTER-HINRICHS: It's Resolution

9 No. 03-074, and I will second your motion.

10 CHAIRMAN BARTCH: Is there any other

11 discussion? Call the roll, please.

12 MS. FRANKS: Chairman Bartch?

13 CHAIRMAN BARTCH: Favor.

14 MS. FRANKS: Commissioner Hinrichs?

15 COMMISSIONER SUTTER-HINRICHS: Favor.

16 MS. FRANKS: Commissioner Gant?

17 COMMISSIONER GANT: In favor.

18 MS. FRANKS: By your vote, you've approved

19 Resolution No. 03-074.

20 MR. MULLALLY: Mr. Chairman, in another

21 non-agenda item, there was recently an incident at Isle of

22 Capri in Kansas City involving an assault of a young woman

23 that has caused us some concern and has been the subject of

24 some local media coverage in Kansas City.

25 COMMISSIONER GANT: Was that Harrah's or --

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1 MR. MULLALLY: I'm sorry. It was Harrah's.

2 COMMISSIONER GANT: I thought we had two of

3 them.

4 MR. MULLALLY: Yes, I believe it was. And

5 Steve Johnson is here to give you a briefing on this issue.

6 COMMISSIONER GANT: Kevin, why don't we see if

7 Mr. Schroeder is still on or not.

8 MR. MULLALLY: Mark, did you go off the line?

9 Mark Schroeder, are you still there?

10 (No response.)

11 CHAIRMAN BARTCH: Okay. Apparently he's gone.

12 MR. STEVE JOHNSON: Mr. Chairman and the other

13 members of the Commission, this incident occurred on Friday

14 the 5th, this last Friday, the 5th, at about 1:30 in the

15 afternoon on the gaming floor. A female patron at one of

16 the area casinos, obviously Harrah's, was abducted and she

17 was robbed and then sexually assaulted.

18 The victim was abducted after -- by an

19 individual who claimed that he was an employee of the

20 casino, and he requested that she accompany him for

21 questioning. He obviously had some understanding of casino

22 operations, and we know why that is, too. He has previous

23 casino experience that we're aware of, employment

24 experience.

25 After leaving the casino, the suspect forced

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1 the victim to withdraw money from an area bank, and he then

2 drove her to an isolated area where the sexual assault

3 occurred. The suspect left the victim at that scene and she

4 reported the assault then to our officers and officer agents

5 at the gaming division office there at Harrah's.

6 Our officers then combined with the Kansas

7 City Police Department sex crime unit to conduct an

8 investigation, and it went very rapidly. We had good

9 surveillance photographs. This fellow was fairly easy to

10 identify. He was arrested, and he's been charged with

11 forcible sodomy, armed criminal action and robbery first

12 degree, and the bond has been set at a million bucks.

13 The case looks very solid, very good. As I

14 indicated to you, it moved very quickly, but it was a solid,

15 quick ID. We actually didn't know about the incident -- the

16 abduction occurred on the 5th. We actually didn't know

17 about the incident until on the 8th. So that will explain

18 the compression in terms of notification and how quickly

19 this thing went down and how quickly the press picked it up

20 and moved with it.